The Korea Chamber of Commerce and Industry advised Korean businesses to preemptively lower prices in the U.S. market to make good use of the free trade agreement with the world’s largest economy, which goes into effect on March 15.
“The United States is our second largest export market after China, but it is actually the most important strategic point for exports,” the KCCI said in report released Tuesday.
“Korean businesses should take the FTA as an opportunity to raise their U.S. market share ― which has fallen into the 2 percent range since 2005 ― to over 3 percent.”
In addition to the price cuts to increase market share, the KCCI proposed three more strategies to maximize the effect of the FTA ― establish a system for timely production and after-sales service and bolster cooperation with local companies, prepare for U.S. customs’ examination of place of origin through collaboration between large and small businesses, and review a possible return to doing business in Korea.
“Once the FTA takes effect, U.S. consumers and buyers will be interested in the changes of Korean product prices in comparison with the products they had been buying,” the KCCI said in the report.
“It would be effective to cut the prices of items of which the tariffs are to be phased out over three or five years all at the same time to gain a good reputation with U.S. consumers.”
The KCCI said this is the time to maximize the effect of price cuts as U.S. consumers are sensitive about prices because of an economic slump.
The KCCI also stressed that Korean businesses should concentrate on marketing activities as soon as the FTA takes effect by holding buyer consultation sessions, setting up permanent exhibitions of Korean products and promoting them through the Internet.
“The Korea-U.S. FTA will turn two thirds of the world economy into a free trade zone, and this will greatly enhance our companies’ competitiveness. We should turn this into an opportunity to improve export conditions which have worsened due to the eurozone debt crisis,” KCCI vice chairman Lee Dong-keun said.
By Kim So-hyun (
sophie@heraldcorp.com)
